Colleges get major bucks from patents

Published 4:00 am, Tuesday, March 28, 1995

Because of a stroke of genius 15 years ago, today the University of California and Stanford University together earn nearly a quarter of all university technology licensing fees in the country, according to a nationwide survey.

The UC system earned $45.4 million and Stanford accounted for $31.2 million of the $318 million in university licensing royalties in 1993, the most recent year for which figures are available, said the Association of University Technology Managers.

But that lead is largely the result of a single invention: the gene-splicing technology that spawned the entire biotechnology industry. And that patent, shared by the two schools, is due to expire at the end of 1997.

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Revenue from patents and inventions is skyrocketing at universities and colleges, which are searching for ways to raise money at the same time private industry is cutting back on research and development.

University royalties jumped 40 percent from 1992 to 1993, according to the association. Collectively, the schools awarded 2,227 licenses to private industry and applied for a record 3,835 new patents.

"We held a moment of silence a few months ago when the (music synthesizer) patent expired," said John Sandelin, senior associate in the university's Office of Technology Licensing. "But the good news is that the follow-on technology was also developed at Stanford."

Stanford is counting on computer music technology and medical technology to shoulder some of the burden once the so-called Cohen-Boyer patent for gene splicing expires.

That patent alone was worth nearly $10 million each to Stanford and the UC system last year. "We're projecting a very significant drop in revenue when that happens," Sandelin said. "There's nothing we can do about it. Fortunately other segments are growing nicely."

When is a lot enough?

Although the UC system led all U.S. universities in royalties, some critics say the system earns less than it ought to.

The UC system's ratio of research dollars to licensing fees only places it in the middle of the pack of U.S. universities, according to Michael Odza, editor of the Technology Access Report, a Novato-based newsletter. He said the system's ratio had been improving in recent years.

The university's royalty-producing inventions include the nicotine patch, developed at UCSF, and patented strains of strawberries created at UC-Davis.

But the system has drawn criticism in the past for centralizing its licensing efforts in a single system-wide office. That system, said Odza, made it difficult for licensing officials to keep tabs on promising inventions throughout the far-flung university system.

The centralized office is slowly giving way to a chain of offices based at individual campuses. The Berkeley, Los Angeles and Davis campuses have opened their own technology licensing offices in recent years, and UCSF is creating one.

Harvard, which earned a meager $24,000 from patent royalties in 1980, made $5.4 million in 1993 and again last year. The money was split between the departments in which the discoveries were made, the university and the inventors.

Firms rely on college research

"Companies are definitely looking at universities as a source of product ideas because they're cutting back on R&D," said Joyce Brinton, director of the Office for Technology and Trademark Licensing at Harvard and president of the technology managers' organization.

"And, yeah, the fact that there's going to be some income from this is definitely a plus."

People who are uncomfortable with a cozy relationship between universities and private industry question whether it is right for schools to reap millions from research that was underwritten by taxpayers in the form of federal grants.

"The fundamental assumption of higher education in this country is that there should be a free exchange of information and ideas," said Arthur Brown, director of the Center for Academic Ethics at Wayne State University.

"That doesn't happen when information is withheld in order to ensure that one company gets a jump on its competitors." &lt;

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